An Income Gap Is Jeopardizing Retirement for Millions of Americans

The New York Times columnist Paula Span recently addressed the challenges many middle-class Americans face, particularly older individuals with lower incomes. Drawing on research from the journal Health Affairs, Span highlighted a growing income gap among Americans nearing retirement. 

The study identified two middle-class tiers: an upper tier with an average of over $90,000 in annual resources and a lower tier averaging less than $32,000 annually. Over the past two decades, the lower tier has faced financial decline, experiencing a 5% drop in homeownership and a 31% decline in the upper middle class. 

Earnings for the working population rose by 27% in the upper tier but fell by 5% in the lower tier, adjusted for inflation. These financial setbacks threaten retirement security, with health and life expectancy implications. Lower-middle-class seniors are less likely to have employer-provided health insurance and report more chronic health conditions. The article highlighted the struggles of individuals like Monique Louvigny, a 64-year-old event coordinator who faced job loss at 57 and now navigates freelance work while carefully managing expenses to avoid sliding into poverty.

For more information see Soumya Karlamangla “An Income Gap Is Jeopardizing Retirement for Millions of Americans”, The New York Times, January 12, 2024.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.